The total borrowing is the same in both cases, and interest is payable on the entire amount (including the balloon payment on the PCP).
In the UK, the majority of PCP deals include the payment of the first year's Vehicle Excise Duty,[3] but subsequent renewals will be at the customer's expense.
[5] It is necessary to fully understand these aspects of a personal contract purchase before signing any deal as a loss may be incurred at this point.
[6] This form of contract purchase was originally used more by businesses than individuals, but there has been steadily increasing use by consumers in countries such as the UK in recent years.
In July 2017, the Competition and Consumer Protection Commission (CCPC) commenced a study into PCP car finance market.
[10] This followed a study by Motorcheck which revealed Ireland's new vehicle market was heavily dependent on PCP agreements.